The whole idea of "if you don't want it public, don't put it on the internet" always reminds me of this Onion video:
Google Opt Out Feature Lets Users Protect Privacy By Moving To Remote Village
http://www.theonion.com/video/google-opt-out-feature-lets-users-protect-privacy,14358/
There's no reason that we can't have a reasonable expectation of privacy, even in our online lives. Especially from a technical standpoint. If I share some photos with 10 people, and one of those people decides to copy that photo into an email and send it off to 100 people, then that's a social failure, not a technical one. People I trusted betrayed my trust, on a social level.
But on a technical level, I should be able to share videos or photos or journal posts with a small group of trusted people, and be reasonably secure in the idea that only they will see them. That advertisers won't have access to that photo, that an api won't be able to pull the data without permission, etc. There's nothing extraordinary about that requirement, and that it's treated as absurd and unreasonable shows how far we've fallen from a basic perspective on internet privacy.
Open source can fill the gap. Our incentive, as open source software developers, is to provide the best software possible, and to not skimp on important features like privacy and security. We aren't trying to cater to advertisers, or to build empires based on fads and hype. I've been working on an open source, distributed social networking alternative to Facebook (and Myspace and other "walled gardens") that called Appleseed that focuses on strong privacy.
http://opensource.appleseedproject.org/
But most of all, by distributing these services, and allowing users to cancel their profile on one site, sign up for another site, and plug right back into the network they lost, it creates a level of competition so that social networking sites *have* to listen to the concerns of their users. They can't take them for granted. Not just in social networking, if we can continue push for open standards, open protocols, open platforms, etc., it means we have some leverage when a popular service decides to privilege it's revenue stream over the privacy of it's users.